"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful."
Warren Buffett
We are definitely going through a very interesting time in our economy to say the least. Although there is great uncertainty in the markets, there also seems to be great opportunity. There is a difference between uncertainty and risk. Although, short term investors tend to mistake the two things, uncertainty and risk are not the same. Wall street hates uncertainty and punishes the stocks of good companies along with the stocks of bad companies. This creates a great buying opportunity for the long term investors. I am almost encouraged by this talk about recession. I have no way of predicting a recession or slow down or meltdown, what I do know is that Mr. Market is giving us a dicount on good companies. Instead of shunning stocks completely in down cycles, investors should add to their holdings or create new positions in stocks that have been on their watchlist.I have opened new positions in a couple stocks that I think have the ability to add to my portfolio in the long run. I have been watching these two stocks for about a year and this market decline has convinced me to jump right in and buy shares of these companies. I am buying stocks of companies that I think are best in their class and are trading at multiples much lower than they are truly worth. As Mr. Buffett says in one of his famous letters to his shareholders "be fearful when others are greedy and greedy when others are fearful".
Berkshire Hathaway Annual Meeting '09 - It's not a company but a culture, maybe a cult
“Although our form is corporate, our attitude is partnership.”
I had the opportunity and privilege to attend the annual meeting of Berkshire Hathaway which is held in Omaha, Nebraska every year around the first weekend of May. This year the meeting was on May 2nd and was held as it has been for the past few years in the Qwest center in downtown Omaha. The meeting was attended this year by about 35,000 shareholders, the most ever. One of the reasons people attend the meeting, including myself, and make the trek to Omaha, Nebraska is the fact that is emphasized by Warren Buffett in the Berkshire Hathaway owners manual.
"Charlie and I hope that you do not think of yourself as merely owning a piece of paper whose price wiggles around daily and that is a candidate for sale when some economic or political event makes you nervous. We hope you instead visualize yourself as a part-owner of a business that you expect to stay with indefinitely, much as you might if you owned a farm or apartment house in partnership with members of your family. For our part, we do not view Berkshire shareholders as faceless members of an ever-shifting crowd, but rather as co-venturers who have entrusted their funds to us for what may well turn out to be the remainder of their lives."
I can personally tell you that the feeling of ownership and entrepreneurship was alive and well in Omaha that weekend. It also doesn’t hurt that the shareholders spent a lot of money on the products and services of Berkshire subsidiaries while in Omaha. Geico insurance, Dairy Queen, Pampered chef, Netjets and Fruit of the Loom are some of the 50 or so Berkshire subsidiaries. There was no sign of a recession in the Qwest Center Expo Hall and other Berkshire-related locations such as Borsheims Jewelers and Nebraska Furniture Mart.
There are tons of articles on the web describing each and every question asked at the annual meeting, so I am not going to cover all of them here. But I am going to mention a few that caught my attention. I am writing from memory so I might paraphrase a little.
Here are some memorable quotes:
“The goal is for the intrinsic value of Berkshire is to advance a few percentage points more each year than the Standard and Poor’s 500.”
"Our business doesn’t have contracts we don’t want relationships by contract."
Munger added, "Our model is a seamless web of trust that’s deserved on both sides. That’s what we’re aiming for. The Hollywood model where everyone has a contract and no trust is deserved on either side is not what we want at all.”
Warren answering a question on free cash flow said “Investing is about laying out cash to get more cash later. If you need a computer or calculator to figure it out, you shouldn't buy it. If you need to go out to the tenth decimal point to find the profit, it's a mistake.”
He also said that “if someone has an IQ of 150 and in the money management business, he should give away 30 points of that because it may not be necessary.”
“We have thought a lot about this (Executive compensation). In a capital intensive business you have to have a factor in a compensation arrangement that includes a capital -cost element. We have dozens and dozens of subsidiaries and we have different arrangements for different businesses because businesses that don’t require capital like See’s and Business Wire are different than business that requires lots of capital.
All in all the meeting was as I mentioned earlier was a cultural experience more than anything. It was great to meet with other investors who believe in the value investing and the Oracle of Omaha. Both Charlie and Warren did not disappoint the shareholders including myself. What I am struggling with now is the question about going to back to the next shareholder meeting or not. Although, it was a great experience, will the next year or the year after that be any different than this year and the year before? Are Charlie and Warren going to be as sharp as they were this year in the following years? It only remains to be seen. For my part, I think I am going to go back next year and see if I can pick a few more pearls of wisdom.
Be fearful when others are greedy and greedy when others are fearful
"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful."
Warren Buffett
We are definitely going through a very interesting time in our economy to say the least. Although there is great uncertainty in the markets, there also seems to be great opportunity. There is a difference between uncertainty and risk. Although, short term investors tend to mistake the two things, uncertainty and risk are not the same. Wall street hates uncertainty and punishes the stocks of good companies along with the stocks of bad companies. This creates a great buying opportunity for the long term investors. I am almost encouraged by this talk about recession. I have no way of predicting a recession or slow down or meltdown, what I do know is that Mr. Market is giving us a dicount on good companies. Instead of shunning stocks completely in down cycles, investors should add to their holdings or create new positions in stocks that have been on their watchlist.I have opened new positions in a couple stocks that I think have the ability to add to my portfolio in the long run. I have been watching these two stocks for about a year and this market decline has convinced me to jump right in and buy shares of these companies. I am buying stocks of companies that I think are best in their class and are trading at multiples much lower than they are truly worth. As Mr. Buffett says in one of his famous letters to his shareholders "be fearful when others are greedy and greedy when others are fearful".
Warren Buffett
We are definitely going through a very interesting time in our economy to say the least. Although there is great uncertainty in the markets, there also seems to be great opportunity. There is a difference between uncertainty and risk. Although, short term investors tend to mistake the two things, uncertainty and risk are not the same. Wall street hates uncertainty and punishes the stocks of good companies along with the stocks of bad companies. This creates a great buying opportunity for the long term investors. I am almost encouraged by this talk about recession. I have no way of predicting a recession or slow down or meltdown, what I do know is that Mr. Market is giving us a dicount on good companies. Instead of shunning stocks completely in down cycles, investors should add to their holdings or create new positions in stocks that have been on their watchlist.I have opened new positions in a couple stocks that I think have the ability to add to my portfolio in the long run. I have been watching these two stocks for about a year and this market decline has convinced me to jump right in and buy shares of these companies. I am buying stocks of companies that I think are best in their class and are trading at multiples much lower than they are truly worth. As Mr. Buffett says in one of his famous letters to his shareholders "be fearful when others are greedy and greedy when others are fearful".
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